2016/11 > Decision overturned in the Laguiole case
French Law No. 2014-344 of 17 March 2014, known as the Hamon Law on consumer matters, reinforced the protection that is given to the distinctive signs of local authorities, which are subject to an ever-increasing number of disputes.
The judgment of the Supreme Court rendered on 4 October 2016 concerns one of the many disputes relating to the term Laguiole. It concerns an action brought by the Laguiole local authority against the holders of trademarks containing the term ‘Laguiole’. The name Laguiole is commercialized internationally for products of all kinds through licensed companies, although most of these products are manufactured in China and do not come from the Laguiole area, which is famous for its cheese and its distinctive bee-branded knives (though they are not made in Laguiole).
Both the Court of First Instance and the Paris Court of Appeal, rejected the Laguiole local authority’s action for deceptive commercial practices and its cancellation actions against trademarks which, the authority claimed, were not available and which were descriptive and deceptive in nature, as well as for fraud (Paris Court of First Instance, 4 April 2014 N ° 12/20559).
The judges considered that, for products other than those which had originally made the region famous, the consumer could not reasonably purchase them thinking that they came from Laguiole or that this name led them to make this purchase. This opinion was reinforced by a survey carried out at the initiative of the Laguiole local authority which, unfortunately for its 1300 inhabitants, concluded that 53% of the respondents had not heard of the village. In the trademark cancellation action, the Court of First Instance also held that the local authority was not entitled to bring actions against certain trademarks because it did not have an interest to do so and because it had refrained from demonstrating that the goods and services covered by those unused marks hindered or were liable to hinder its own activities.
The Supreme Court has delivered quite a different assessment of the case and partially overturned the judgment of the Paris Court of Appeal.
- Deceptive commercial practices:
On this point, the Supreme Court ruled that “a commercial practice is deemed deceptive where it contains false information or is liable to mislead the average consumer and materially affects the economic conduct of the latter by causing it to take a commercial decision which it would not have taken otherwise”. The Supreme Court ruled that when the lower court rejected the claim made on this basis (on the grounds that confusion must be established and that a mere risk is not sufficient) the lower court had violated the relevant texts. The Supreme Court also criticized the Court of Appeal for failing to enquire whether the use of the Laguiole name, known to 47% of the representative sample of the French population, was principally for its knives or its cheese, and whether this could mislead the consumer and materially alter their purchasing behaviour for other products.
Lastly, the Court considered that the earlier judgement had distorted the facts of the case, when it had found that the mention of the name of the area and the presentation of multiple products marked Laguiole on the site www.laguiole.tm.fr was not misleading in relation to their geographical origin, despite the fact that this website explicitly referred to the town of Laguiole as “our village”.
- The invalidity of the marks at issue:
Unlike the earlier judgements, the Supreme Court did not consider this request to be inadmissible. The Court accepted the Laguiole local authority’s argument that “none of the owners of the trademarks in question were from the Laguiole area and had no legitimate interest in filing them. Despite the trademark owners’ claims that the actions should be inadmissible because the registrations were made in good faith, it had already been shown that all these marks had been filed with the sole intention of doing harm.”
Furthermore, the earlier judges had ruled that the local authority had not shown that the owners of the Laguiole trademarks acted with a malicious intent for preventing it from utilizing the name Laguiole. The Supreme Court considered however, that the Court of Appeal should have sought to find out, as had been requested, “if the filing of a set of trademarks comprising the name ‘Laguiole’, sometimes combined with the emblematic bee design, to designate many products and services not linked to this commune, was not part of a commercial strategy aimed at depriving it or its current or future administrators of the use of the name which is necessary for its activity. Thus the acts of M. X … and the Laguiole company should be characterized as having been made in bad faith, which also taints the trademark filings with fraud. ”
- The cancellation of the proprietor’s rights over the trademarks at issue:
The Supreme Court considered that cancellation of a trademark for non-use may be requested by any interested person and that the Laguiole local authority, whose name had been registered as a trademark for all or almost all classes, which was creating an obstacle to the free use of that name for the exercise of its activities, had such an interest. To the respondents’ argument that the Laguiole local authority was not an entity capable of carrying out an economic activity, the Supreme Court replied that “such a representative group could participate in economic and social matters under the conditions laid down in the general code of local and regional authorities. ”
It should be noted that, even if, in order to combat this type of practice, local authorities have long been accustomed to filing their names as trademarks, the Hamon law of 17 March 2014 has now increased their means of defence by giving them the right to make representations before the French Trademark Office when a trademark is filed and by giving them the right to object to its registration, even if for the time being these provisions are still rarely used.